Purcell v. Mwi Corporation , 50 F. Supp. 3d 33 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
ex rel. ROBERT R. PURCELL,
Plaintiffs,
v. Civil Action No. 98-2088 (GK)
MWI CORPORATION,
Defendant.
MEMORANDUM OPINION
On November 25, 2013, after a nine-day trial, a jury found
Defendant MWI Corporation ("Defendant" or "MWI") liable for
violations of the False Claims Act ("FCA") I 31 u.s.c.
§ 3729(a) (1), (2). The matter is now before the Court on MWI's
Motion for Judgment as a Matter of Law [Dkt. No. 443] and MWI's
Renewed Motion for Judgment as a Matter of Law [Dkt. No. 478].
Upon consideration of the Motions, Oppositions, Replies, and the
entire record herein, and for the reasons set forth below, the
Court concludes that Defendant's Motion for Judgment as a Matter
of Law shall be denied and Defendant's Renewed Motion for
Judgment as a Matter of Law shall be denied.
1
I . BACKGROUND
In 1992, MWI, a Florida corporation, arranged to sell
irrigation pumps and other equipment to seven Nigerian states.
The total sale price was $82.2 million.
To finance these sales, MWI and the Federal Republic of
Nigeria ("Nigeria") sought and received eight loans from the
Export-Import Bank of the United States ("Ex-Im"), an agency of
the United States that finances and facilitates transactions
between U.S. exporters and international buyers. Ex-Im agreed to
finance the deal and loan Nigeria $74.3 million. Nigeria agreed
to pay back the $74.3 million, as well as interest and fees, and
the individual Nigerian states agreed to pay the remainder of
the $82.2 million price.
Before Ex-Im would approve the loans to Nigeria, it
required MWI to submit a "Letter of Credit Supplier's
Certificate" for each of the eight loans. On each of those eight
Letter of Credit Supplier's Certificates, MWI attested that it
had paid only "regular commissions" in connection with the pump
sales. See Pls.' Ex. 283.
1
For purposes of ruling on a motion for judgment as a matter of
law, the evidence is examined in the light most favorable to the
nonmoving party. Kakeh v. United Planning Org., Inc., 655 F.
Supp. 2d 107, 115 (D.D.C. 2009) (citation omitted). Accordingly,
unless otherwise noted, the facts that follow are taken from the
evidence presented at the nine-day trial held in November 2013
and from Plaintiffs' Oppositions.
-2-
After Ex-Im approved the loans, but before it disbursed any
funds, it required MWI to submit a "Disbursement Supplier's
Certificate." MWI attested on 50 Disbursement Supplier's
Certificates that it had paid only "regular commissions" in
connection with the pump sales. See Pls.' Ex. 284. Thus, MWI
submitted eight Letter of Credit Supplier's Certificates and 50
Disbursement Supplier's Certificates to Ex-Im. 2
In 1998, Relator Robert Purcell, a former employee of MWI,
filed this action under the FCA. Complaint [Dkt. No. 1] He
alleged that MWI paid commissions in excess of 30 percent to its
long-time Nigerian sales agent, Alhaji Mohammed Indimi
("Irtdimi"). Id. ~~ 35-37. Purcell alleged that those commission
payments were not "regular" and should have been disclosed on
all of the Supplier's Certificates that MWI submitted to Ex-Im.
Id.
In April of 2002, the United States decided to intervene,
and filed a complaint which then governed the proceedings
("Complaint") [Dkt. No. 18] Based in part on the amount of
commissions paid to Indimi, which at the time was estimated to
2
As this Court has already noted, MWI did not challenge at trial
the Government's evidence or testimony regarding 58 total
Supplier's Certificates. United States ex rel. Purcell v. MWI
Corp., F. Supp. 2d _, 2014 WL 521524, at *1 n.1 (D.D.C. Feb.
10, 2014) ("Judgment Opinion")
-3-
be approximately $28 million dollars, 3 the Complaint alleged two
violations of the FCA (Counts I and II) and two common law
claims for unjust enrichment and payment by mistake (Counts III
and IV) .
The case was litigated for several years before Judge
Ricardo M. Urbina. Judge Urbina made several findings and
conclusions that bind this Court, including two opinions
granting in part and denying in part various Motions for Summary
Judgment. See United States ex rel. Purcell v. MWI Corp. , et
al., 520 F. Supp. 2d 158 (D.D.C. 2007) ("First MSJ Opinion");
United States ex rel. Purcell v. MWI Corp., 824 F. Supp. 2d 12
(D.D.C. 2011) ("Second MSJ Opinion").
After Judge Urbina's retirement, the case was reassigned to
Judge Colleen Kollar-Kotelly, and then to this Court. After
resolving many pre-trial motions, the case went to trial on
November 6, 2013.
3
At trial, the Government argued that MWI had paid $25 million
dollars in commissions to Indimi, not $28 million. See, e.g.,
Pls.' Opening St., Trial Tr. Nov. 8, 2013, A.M. Session at 25:9-
12 (telling jury it needed "to decide whether MWI knew or should
have known that the $25 million payment to Mr. Indimi was
irregular and that it should have been disclosed"); Pls.'
Closing Arg., Trial Tr. Nov. 21, 2013, A.M. Session at 50:20-22
("$25 million in Ex-Im funds went into the bank account of MWI's
Nigerian agent Alhaji Indimi."); id. at 76:10-12 (suggesting
that measure of amounts be the $25 million that United States
"unknowingly paid to Mr. Indimi").
-4-
At the close of the Government's case, MWI moved for
judgment as a matter of law under Rule 50(a). Trial Tr. Nov. 19,
2013, P.M. Session at 79:8-80:7. "Consistent with the best
practices governing pre-verdict motions, the Court reserved
ruling" on MWI's motion. See Hancock v. Washington Hosp. Ctr.,
F. Supp. 2d 2014 WL 60288, at *1 (D.D.C. 2014) (quoting
Moore's Federal Practice Civil § 50.33). The Court ordered
Defendant to file a written brief in support of its motion.
Trial Tr. Nov. 19, 2013, P.M. Session at 80:7-8.
On November 22, 2013, the case went to the jury on Counts I
and II of the Complaint. On November 25, 2013, the jury returned
a verdict for Plaintiffs on both Counts I and II [Dkt. No. 453].
The Government then dismissed Counts III and IV of the
Complaint, its common law claims, with prejudice. Trial Tr. Nov.
25, 2013, A.M. Session at 22:18-20.
On December 9, 2013, Plaintiffs filed an Opposition to
Defendant's Motion for Judgment as a Matter of Law [Dkt. No.
460], and on December 19, 2013, Defendant filed a Reply [Dkt.
No. 466]
On February 12, 2014, Judgment was entered in favor of
Plaintiffs [Dkt. No. 473]. On March 12, 2014, MWI filed a
Renewed Motion for Judgment as a Matter of Law ("Renewed Mot.")
[Dkt. No. 478]. On April 9, 2014, Plaintiffs filed an Opposition
-5-
[Dkt. No. 483], and on April 25, 2014, Defendant filed a Reply
("Renewed Reply") [Dkt. No. 484].
II. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 50 (a), "[i] f a party
has been fully heard on an issue during a jury trial and the
court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that
issue," then a court may "grant a motion for judgment as a
matter of law against the party on a claim or defense that,
under the controlling law, can be maintained or defeated only
with a favorable finding on that issue." Fed. R. Civ. P.
50 (a) (1) (B) .
"If the court does not grant a motion for judgment as a
matter of law made under Rule 50(a), the court is considered to
have submit ted ~the act ion to the jury subject to the court ' s
later deciding the legal questions raised by the motion." Fed.
R. Civ. P. 50(b). If the moving party renews its motion for
judgment as a matter of law following the discharge of the jury,
the Court may consider the motion and, if appropriate, direct
the entry of judgment as a matter of law. Fed. R. Civ. P.
50 (b) (3).
"The legal standard for granting a motion for judgment as a
matter of law is the same whether it is rendered during the
-6-
trial under Rule 50 (a), or after the jury has been discharged
under Rule 50 (b) . " Beyene v. Hilton Hotels Corp., 958 F. Supp.
2d 247, 249 (D.D.C. 2013). A court should grant judgment as a
matter of law only "when a party has been fully heard on an
issue, and there is no legally sufficient evidentiary basis for
a reasonable jury to find for that party on that issue." Reeves
v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 135 (2000).
Although the court should examine all evidence in the
record, "the court must draw all reasonable inferences in favor
of the nonmoving party, and it may not make credibility
determinations or weigh the evidence." Id. at 149. Moreover,
courts "do not lightly disturb a jury verdict. Judgment as
a matter of law is appropriate only if the evidence and all
reasonable inferences that can be drawn therefrom are so one-
sided that reasonable men and women could not have reached a
verdict in plaintiff's favor." Nelson v. Dist. of Columbia, 953
F. Supp. 2d 128, 130 (D.D.C. 2013).
As a post-trial Rule 50(b) motion is limited to a renewal
of a Rule 50 (a) motion for judgment as a matter of law, the
post-trial motion must be limited to those grounds that were
specifically raised in the prior Rule 50(a) motion. Beyene, 958
F. Supp. 2d at 249 (citation omitted).
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III. ANALYSIS
The Government alleged two violations of the FCA. First,
the Government alleged that MWI knowingly presented false or
fraudulent claims for payment to the United States Government.
Complaint ~~ 46-48 (citing 31 U.S.C. § 3729 (a) (1)). Second, the
Government alleged that MWI knowingly made false records or
false statements to get the Government to pay or approve false
or fraudulent claims for payment. Complaint ~~ 49-51 (citing 31
U.S.C. § 3729(a) (2)) . 4 The jury found for the Government on both
Counts. Verdict at 1-2 [Dkt. No. 453].
4
On May 20, 2009, Congress enacted the Fraud Enforcement and
Recovery Act of 2 009 ( "FERA'') . Among other things, Congress
replaced the language of Section 3729(a) (2) with a new section
3729 (a) (1) (B). See FERA, Pub. L. No. 111-21, § 4 (a) (1), 123
Stat. 1617 (May 20, 2009). The amendments were made retroactive
to all "claims" under the False Claims Act "that are pending on
or after" June ·7, 2008. Id. § 4 (f) . Although our Court of
Appeals has not yet decided this issue, United States v. Sci.
Applications Int'l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 2010),
(assuming without deciding that lower court determination that
statute did not apply retroactively was correct) , the district
courts in this Circuit have found that the retroactivity
presumption applies to claims, but not cases, pending in June
2008. See, e.g., United States ex rel. Barko v. Halliburton Co.,
952 F. Supp. 2d 108, 118 (D.D.C. 2013) ("The retroactive
provisions apply, then, to fraudulent requests for money pending
on or after that date."); United States v. First Choice Armor &
Equip., Inc., 808 F. Supp. 2d 68, 76-77 (D.D.C. 2011) ("The word
'claims,' as it applies in the relevant provision, refers to 'a
defendant's request for payment' and not to 'civil actions for
FCA violations.'" (quotation and citation omitted)). During the
trial, this Court held in accordance with its sister courts that
the pre-amendment version of the statute would apply and
instructed the jury accordingly. Trial Tr. Nov. 8, 2013, A.M.
Session at 127:10-18.
-8-
MWI raises several arguments that the Court will address in
turn. However, many of MWI' s arguments ask the Court to "make
credibility determinations or weigh the evidence," which it is
not permitted to do. Reeves, 530 U.S. at 149; Estate of Mark
Parsons v. Palestinian Auth., 651 F.3d 118, 124 (D.C. Cir. 2011)
("Sorting out contradictions [and] deciding how much
weight to give evidence that supports or undermines [a party] 's
case . are prototypical jury functions that courts may not
commandeer.") . Likewise, the Court will not revisit its prior
legal conclusions, which were unaffected by the evidence
introduced at trial. Cf. Feld v. Feld, 688 F.3d 779, 782-83
(D.C. Cir. 2012) (holding that Rule 50 motions are not required
to preserve purely legal claims for appeal).
A. There Was Sufficient Evidence to Support the Jury's
Finding that the 58 Supplier's Certificates Were
"Claims"
MWI argues that Plaintiffs failed to introduce any evidence
that the Supplier's Certificates were "claims for payment" as
defined by the FCA. Renewed Mot. at 45. The FCA defines "claim"
to include "any request or demand, whether under a contract or
otherwise, for money or property which is made to a contractor,
grantee, or other recipient if the United States Government
provides any of the money or property which is requested or
demanded, or if the Government will reimburse such contractor,
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grantee, or other recipient for any portion of the money or
property which is requested or demanded." 31 U.S.C. § 3729(c).
"A submission need not be an actual invoice to be a 'claim' or
'statement' under the Act.'" United States ex rel. Schwedt v.
Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995).
Earlier in this litigation, MWI argued that, as a matter of
law, "submissions made in connection with efforts to obtain
Government loans cannot be treated as false claims under the
FCA." Def. MWI Corp.'s Mot. for Clarification at 6 [Dkt. No.
230]. Judge Urbina rejected that argument, and granted the
Government's Motion for Summary Judgment on the issue of the
existence of claim and the issue of presentment. First MSJ
Opinion, 520 F. Supp. 2d at 174 n.6; see also Order of March 20,
2008 (granting Plaintiff's Motion for Partial Summary Judgment
on the FCA elements of "the existence of a claim" and
"presentment of a claim to the government") [Dkt. No. 2 3 3]
Indeed, MWI acknowledged prior to trial that Judge Urbina
had resolved the issue of whether or not a "claim" existed. Def.
MWI Corp.'s Mot. for Clarification at 6 (" [T] he 'claim' element
under the Government's FCA claims no longer remains for
resolution at trial.") . Accordingly, the Court instructed the
jury that the Supplier's Certificates in this case were "claims"
under the False Claims Act and that the jury could assume that
-10-
"each of those documents is a 'claim' for payment." Trial Tr.
Nov. 21, 2013, A.M. Session at 35:16-19. Thus, Plaintiffs did
not have to introduce evidence as to the "claim" element at
trial. 5
B. There Was Sufficient Evidence to Support the Jury's
Finding that MWI's Claims Were False
Plaintiffs' theory of falsity was that MWI's certifications
on its Supplier's Certificates were false because it attested
that it paid only "regular commissions." Complaint ~ 15; Trial
Tr. Nov. 21, 2013, A.M. Session at 36:10-17. Consequently, in
order to ascertain whether the claims were false, the jury had
to evaluate whether the commissions MWI paid to Indimi were
"regular."
Because the jury found that the 58 Supplier's Certificates
were false claims, it necessarily found that the Indimi
commissions were not "regular." Sufficient evidence was
introduced to support the jury's finding.
5
The jury was required to identify the number of false claims
and/or false records or false statements, if it found liability.
Trial Tr. Nov. 21, 2013, A.M. Session at 35:16-19; see also
United States ex rel. Miller v. Bill Harbert Intern. Const. ,
Inc., Case No. 95-1231, 2007 WL 851868, at *2 (D.D.C. March 14,
2007) ("The jury's job in this case will be to determine the
number of violations and fix the amount of actual damages, if
any."). Plaintiffs introduced evidence that there were 58
Supplier's Certificates, and the jury found accordingly. Pls.'
Ex. 283 (8 Letter of Credit Supplier's Certificates); Pls.' Ex.
284 (50 Disbursement Supplier's Certificates); Verdict at 1-2
[Dkt. No. 453] (identifying 58 false "claims" and 58 "false
records and false statements").
-11-
The strongest evidence that the commissions paid to Indimi
were not regular was the sheer amount of money paid to Indimi.
Between 1992 and 1994, the commissions paid to Indimi dwarfed
those paid to other MWI agents. Def.'s Ex. 500 ($26,070,181 was
paid in 8 commissions to Indimi; $1,744,537 was paid in 48
commissions to all other agents) . Between 1980 and 1995, MWI
paid $51,986,394 in 23 commissions to Indimi. Id. The other 130
commissions to MWI's other sales agents add up to approximately
$3.6 million dollars combined. Id.
Of the largest 21 commissions paid between 1980 and 1995,
Indimi received 19 of them. Id. His largest commission, in April
of 1985, was $12,750,1'49 (almost four times as much as MWI paid
all other sales agents over 15 years). Id.
MWI argues that the total dollar amount of the commissions
is misleading. Renewed Mot. at 2i. However, in addition to the
high dollar amount Indimi received, the percentage of the total
sales that he received in commissions was far higher than the
percentages given to other MWI sales agents. Eighteen of the 153
commissions MWI paid between 1980 and 1995 were above 30% of the
sales price, and 15 of those went to Indimi. Def.'s Ex. 500.
MWI emphasizes that three other commission percentages were
higher than 3 0% of th,e sales price, Renewed Mot. at 11, but
those commissions were comparatively small. Def.'s Ex. 500
-12-
(commissions of $26,624 (Feb. 2, 1990), $23,387 (July 22, 1980),
and $16,839 (August 13, 1982)). Importantly, as Rita Rodriguez
testified, commission percentages often have to be higher when
the total sale amount is lower. Test. of Rita Rodriguez, Trial
Tr. Nov. 14, 2013, A.M. Session at 89:24-90:6; see also Test. of
Thomas Roegiers, Nov. 19, 2013, A.M. Session at 111:6-10
(testifying that "there's no sense in" comparing commission
amounts on separate sales "without also comparing the sales
value") .
In addition, the average percentage of sales price paid to
MWI sales agents in commissions between 1992 and 1994 was
approximately 10%, but Indimi's average percentage of sales
price was 33.9%. Def. 's Ex. 500. Similarly, the average
percentage of sales price paid to MWI sales agents between 1980
and 1995 was 14.68%, but Indimi' s average percentage of sales
price was 33.71%. Id.
Thus, the evidence supports the jury's finding that the
commissions were "irregular" because the Indimi commissions were
generally much higher than the commissions paid to MWI's other
agents, both in total amount and in percentage of sales price.
Moreover, the evidence that Indimi was paid commission
percentages between 26% to 37% was particularly significant
because multiple Ex-Im employees testified that they expected
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commissions to be "in the lower than 5 to around 10 percent
area." Hess Dep. 60:18-22, Sept. 22, 2004; 6 see also Test. of
Rita Rodriguez, Trial Tr. Nov. 14, 2013, A.M. Session at 75:15-
16, 76:14-19 (testifying that 5% was standard, and that anything
over 8% or 10% would be unlikely to be approved) . This statement
correlates with the testimony given by MWI employee Juan Ponce
that Ex-Im expected its commissions to be no more than 5%. Test.
of Juan Ponce, Trial Tr. Nov. 13, 2013, A.M. Session at 22:1-10.
Ex-Im employees also testified that commissions of either
the percentage of sales price or the total dollar amount paid to
Indimi were unquestionably "irregular" and far outside the scope
of anything they had ever seen. See, e.g. , Test. of David
Chavern, Trial Tr. Nov. 12, 2013, A.M. Session at 83:10-18,
88:24-89:9 (testifying that if a commission of either 24% or 35%
had been disclosed, the bank would not have approved the
disbursement); Test. of Leilani Lansing, Trial Tr. Nov. 12,
2013, P.M. Session at 48:2-3, 51:7-16, 51:20-21, 52:23-25,
84:13-23 (referring to the total amount paid to Indimi in
commissions on all of the sales as "huge compared to the amount
of the sale, and also the percentage," "absurd," an "outrageous
amount," and "far beyond the range of anything reasonable") ;
6
An edited version of Hess's Sept. 22, 2004, deposition was
played for the jury on Nov. 8, 2013. See Trial Tr. Nov. 8, 2013,
P.M. Session at 10:14-15, 10:23-24.
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Test. of Rita Rodriguez, Trial Tr. Nov. 14, 2013, A.M. Session
at 29:21-37:21 (testifying that even the lowest commission
percentage, 24%, would be found irregular because she did not
"know of any industry in any country that regularly pays that
kind of commission legitimately" and noting that it would be
"astounding" and "unbelievable" that anyone would suggest that
the Government should finance such a transaction) . In sum, the
Government submitted ample evidence supporting the jury's
finding that the commissions paid to Indimi were not "regular,"
7
and, thus, MWI's certifications to the contrary were false.
MWI raises several arguments regarding the jury's finding
of falsity, but none of the arguments meaningfully challenges
the sufficiency of the evidence. First, MWI argues that the
language of the Certificates was so vague and ambiguous as to
negate a finding of falsity. In 2007, Judge Urbina rejected this
argument. First MSJ Opinion, 520 F. Supp. 2d at 176-77 ("Under
7
MWI emphasizes that William Brickhill and other Ex-Im employees
indicated that certain factors, including difficult country
conditions, the exclusivity of the agent, or the longevity of
the agent's tenure, may have been relevant to whether a
commission was "regular." Renewed Mot. at 19-20; Renewed Reply
at 4, 9-10. MWI neglects to note, however, that these witnesses
testified that these factors would have been relevant to Ex-Im's
analysis of whether or not to continue with the transaction
after an irregular commission was disclosed, not whether the
commission should have been disclosed in the first instance.
See, e.g., Test. of David Chavern, Trial Tr. Nov. 12, 2013, A.M.
Session at 116:24-118:17; id. Trial Tr. Nov. 12, 2013 P.M.
Session at 19:14-21; Test. of Leilani Lansing, Trial Tr. Nov.
12, 2013, P.M. Session at 75:12-78:19.
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these standards, the court concludes the regulation here is
sufficiently clear to put exporters on notice of the type of
commissions required to be disclosed.") This conclusion was
included in ·the instructions to the jury. See Trial Tr. Nov. 21,
2013, A.M. Session at 36:22-27 ("For purposes of determining
falsity, you may not consider whether MWI knew this definition
or whether MWI had a different interpretation of the term
'regular commission' or whether the term 'regular commission'
was vague or ambiguous.")
Despite being specifically foreclosed from pursuing this
theory, MWI now raises the same argument, couched in the
language of "objective standards." Renewed Mot. at 4-10.
However, the basis of its theory is the same - that the language
of the Certificates provides so little guidance that no
commission could be said to be "regular" or "irregular." Id. at
4 (arguing that Government failed to show the commissions "could
be objectively adjudged to be regular or irregular under the
8
circumstances here") This legal argument has been rejected
repeatedly by this Court and MWI has failed to raise any
"intervening change of controlling law[] or new evidence,"
8
The Court notes that MWI did not raise its "objective standard"
argument in its Rule 50(a) Motion, and, consequently, even if it
had merit, the argument was waived. Beyene, 958 F. Supp. 2d at
249 (citation omitted); see also Whelan v. Abell, 48 F.3d 1247,
1251 (D.C. Cir. 1995) (movant who omits theory from Rule 50 (a)
motion waives theory as basis for Rule 50(b) motion).
-16-
Alliance for Cannabis Therapeutics v. D.E.A., 15 F.3d 1131, 1134
(D.C. Cir. 1994), that would justify revisiting the Court's
conclusion. Therefore, the Court will simply reiterate that the
language of the Supplier's Certificate was not so ambiguous as
to prevent a finding of falsity.
Second, MWI argues that the Government failed to introduce
evidence of the relevant "industry standard." Renewed Mot. at
14-17. In 2007, Judge Urbina found that "Ex-Im's interpretation
of 'regular commissions' as referring to industry-wide
benchmarks is not only 'consistent' with the underlying term but
is finely attuned to its context and purpose." First MSJ
Opinion, 520 F. Supp. 2d at 177. Thus, the Court instructed the
jury that, "[t]he term 'regular commissions' refers to
commissions normally and typically paid by the exporter and its
competitors in the same industry." Trial Tr. Nov. 21, 2013, A.M.
Session at 36:20-22.
MWI now argues that because the instruction to the jury
defined regular commissions as "commissions normally and
typically paid by the exporter and its competitors in the same
industry," id. (emphasis added), the Government was required to
introduce specific evidence of commissions paid both by MWI and
by MWI's industry competitors to meet its burden on the element
of falsity. Revised Mem. at 14-17.
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The Court disagrees. The intent of this instruction was to
provide some guidance to the jury as to the scope of the
"regular commissions" inquiry, not to establish an evidentiary
requirement. At no point has this Court ever held that the
Government could not prove falsity unless it proved by a
preponderance of the evidence exactly what the industry standard
was for commission payments on the sale of pumps in Nigeria. 9
Moreover, the objection is unavailing because the
Government submitted evidence to the jury to enable them to make
reasonable inferences about the commissions normally and
typically paid in the industry. See Beyene, 958 F. Supp. 2d at
249 (noting that court must draw all reasonable inferences in
favor of non-moving party). Namely, evidence was submitted that,
in markets where there was competition, MWI' s commissions were
limited to "10 percent or less." Test. of Juan Ponce, Trial Tr.
Nov. 13, 2013, A.M. Session at 29:23-30:6; see also id. at 31:9-
18 (in markets with competition, "[s]ometimes commissions cannot
be any more than 5 percent") . This testimony corresponds with
MWI's own commissions data. See, e.g., Def. 's Ex. 500
(commissions percentages in Europe between 1980 and 1995 were
9
Indeed, Judge Urbina noted in an earlier opinion, "the precise
metes and bounds of the 'relevant industry' cannot be defined
with mechanical precision." Second MSJ Opinion, 824 F. Supp. 2d
at 27 n.6 (rejecting MWI's argument that difficulty of defining
relevant industry insulated them from liability) .
-18-
5%-10%; average commission in Central American between 1992 and
1994 was 8%) . Evidence was presented that the pump industry
standard was to keep prices low by keeping commissions low.
Ponce's testimony also explained why the Government did not
have specific evidence about commission payments paid by
competitors selling irrigation pumps in Nigeria - there were no
such competitors. Test. of Juan Ponce, Trial Tr. Nov. 13, 2013,
A.M. Session at 30:11-17 ("The Hydraflo pump was a proprietary
equipment, and even though we had some competition later on, but
we were basically alone in the market with this particular
product."); see also id. at 29:23-30:6, 31:1-7. Because there
were no direct competitors, it would have been impossible for
the Government to submit specific evidence about what
competitors paid in commissions for similar products.
In sum, the Government submitted sufficient evidence as to
how the industry generally functioned to constitute a
"legally sufficient evidentiary basis for a reasonable jury to
find" that Indimi's commissions were irregular compared to those
generally paid in the industry. Reeves, 530 U.S. at 149.
Third, MWI argues that the jury could not find that the
Indimi commissions were irregular as compared to its other
commissions because all of its commissions were calculated using
the same formula. Renewed Mot . at 17-23; Renewed Reply at 7 1.
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Def.'s Ex. 533. This formula set a commission of 10% of the base
price. Def.'s Ex. 533. The agent would then also receive half of
any sales amount received over the base price. Id. ; see also
Test. of Cornelius Lang, Trial Tr. Nov. 14, 2013, P.M. Session
at 47:20-48:12.
MWI insists thc;tt its "neutral" application of this formula
to all sales is nonrebuttable evidence of regularity. Revised
Mem. at 11-12. However, the Government submitted evidence that
explained how the lack of competition in Nigeria affected the
sales price and application of the commissions formula in
important ways.
Because ther~ were no competitors selling similar pumps in
Nigeria, there were no market forces to ensure that MWI's prices
or commissions were not inflated. Ponce testified that the lack
of competition in Nigeria permitted MWI "to put the high
commissions into the price of the pumps." Test. of Juan Ponce,
Trial Tr. Nov. 13, 2013, A.M. Session at 16:9-10; see also id.
at 83:18-20 ("[T]he fact that we had no competition, so we were
able not only to pay Indimi the high commissions, but also to
have very high profits for the company.").
The evidence showed that Indimi sold his products to
Nigeria at between 168% of the base price and 296% of the base
price. See Def.'s Ex. 533 (setting forth formula for calculation
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of commissions); Def. 's Ex. 500 (listing commissions and sales
prices). On average, Indimi's sales were close to 250% of the
base price. Id. In comparison, sales of other salespeople
between 1992 and 1994 were an average of 102% of the base price.
Id.
Consequently, the fact that Indimi's high commissions were
calculated according to a formula does not make the commissions
"regular" because the formula was applied to irregular, inflated
prices. Although companies are free to charge whatever prices
they can get in the private market, the Ex-Im' s purpose is to
finance sales made on a commercially-based basis. Hess Dep.
100:2-10, Sept. 22, 2004. As the Ex-Im witnesses testified
consistently, the purpose of requiring disclosures of high
commissions is, at least in part, to assure that the Bank
invests in projects where the "products are priced correctly."
Test. of David Chavern, Trial Tr. Nov. 12, 2013, A.M. Session at
109:5-14; see also id. at 66:1-6 (stating that Ex-Im would not
want situation where "the amount of lending that the bank is
doing is in excess of what's needed to actually buy the
product"); Test. of Leilani Lansing, Trial Tr. Nov. 12, 2013,
P.M. Session at 52:4-13 (noting that disclosure of high
commission rate "would raise in my mind the question as to
whether we approved the loan for the wrong amount")
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In sum, the jury had a sufficient evidentiary basis to
reject MWI's argument that its application of a consistent
formula to all its commissions made these irregular
transactions, and the irregularly high commissions that
accompanied them, "regular" for purposes of procuring Ex-Im
financing.
Fourth, MWI argues that the Indimi commissions were
"regular" because they were consistent with the commissions it
had been paying to Indimi for years. Revised Mem. at 12. MWI
argued this theory to the jury, and the jury rejected it. It was
certainly not unreasonable for the jury to conclude that MWI' s
exorbitant commissions to Indimi were not "regular" simply
because it had paid him similarly exorbitant commissions for
years. There is simply no basis for the Court to overturn this
finding. See Estate of Mark Parsons, 651 F.3d at 124.
Finally, MWI argues that the Government inappropriately
argued that the many unconventional ways in which Indimi
received his commissions was evidence of irregularity. Renewed
Reply at 13. 1 ° Contrary to MWI' s insistence that the Government
1
°
For example, MWI and its employees paid Indimi's personal
expenses and then deducted the payments from future commissions
at no cost; paid for Indimi's lawn, pool, cable, cleaning,
phone, and water services; paid Indimi's $43,000 American
Express bill; made numerous cash advances to Indimi; gave Indimi
large advances on his commissions; provided Indimi with no-
interest loans; helped Indimi sell his home; reimbursed Indimi's
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never raised this theory before trial, this Court ruled on a
Motion in Limine that the Government's evidence regarding
Indimi' s cash payments and advances were "directly relevant to
the central factual issues in this case of whether Defendant's
certifications with the Ex-Im Bank were false and whether the
Indimi commissions were 'regular.'" Order on Motion in Limine 12
at 1 [Dkt. No. 3 84] . Consequently, MWI was on notice that the
Government would argue that the many free services offered by
MWI to Indimi were indications that his commissions were not
"regular," and that evidence was properly admitted.
In sum, the Government presented a "legally sufficient
evidentiary basis" for the jury to find that the commissions
wife for summer school expenses; provided Indimi with a company
plane; and acted as Indimi's power of attorney. Test. of David
Eller, Trial. Tr. Nov. 8, 2013, A.M. Session at 80:9-81:3,
84:10-16, 85:7-88:2; Test. of Cornelius Lang, Trial Tr. Nov. 14,
2013, P.M. Session at 14:12-15:22, Test. of Judith Ennis, Trial
Tr. Nov. 14, 2013, P.M. Session at 66:17-67:9, 69:9-74:12, 76:7-
77:6, 79:6-84:1, 89:3-91:5. Even though many of these payments
and services were deducted from Indimi's commissions, the
evidence showed that, in general, MWI's other sales agents did
not receive such perks. Test. of Judith Ennis, Trial Tr. Nov.
14, 2013, P.M. Session at 92:2-4 (in 27 years with the company,
could not remember MWI paying the personal expenses of any other
sales agent); id. at 96:23-97:10 (noting that, after deposition,
she had found two examples of another agent receiving advances
against commission) .
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paid to Indimi were not regular, and, thus, that MWI' s
certifications were false.ll Reeves, 530 U.S. at 149.
C. There Was Sufficient Evidence to Support the Jury's
Finding that MWI Acted With the Requisite Scienter
For both counts, the Government needed to prove that MWI
acted "knowingly." The Court instructed the jury: "Under the
False Claims Act, knowingly means that, with respect to the
allegedly false or fraudulent information, a defendant had
actual knowledge of the information; or acted in
deliberate ignorance of the truth or falsity of the information,
or acted in reckless disregard of the truth or falsity of the
information." Trial Tr. Nov. 21, 2013, A.M. Session at 37:3-12.
ll MWI also argues that it is entitled to judgment as a matter of
law on the Government's "second, separate theory of falsity."
Renewed Mot. at 24. MWI insists that the Government alleged in
its Complaint that. the commissions were also irregular because
they included payments to Nigerian state officials. Renewed Mot.
at 24-29. The Government did not address this issue in its
Opposition, and, thus, it may be treated as conceded. Hopkins v.
General Bd. of Global Ministries, 284 F. Supp. 2d 15,_25 (D.D.C.
2003) ("It is well understood in this Circuit that when a
plaintiff files an opposition to a dispositive motion and
addresses only certain arguments raised by the defendant, a
court may treat those arguments that the plaintiff failed to
address as conceded."). This concession is of little import,
however, because, even if this was a separate theory of falsity,
Defendant acknowledges it was an alternate Government theory of
falsity. Renewed Mot. at 24. Because the Government submitted
sufficient evidence to support the jury's finding that the
commissions were irregular based on the size of Indimi's
commissions, its failure to prove that Indimi used the
commission money to pay Nigerian state officials provides
Defendant no relief from the verdict.
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There was ample evidence to support a finding that MWI
acted with, at a minimum, reckless disregard. See United States
v. Sci. Appl. Int'l Corp., 653 F. Supp. 2d 87, 97 (D.D.C. 2009)
(noting that jury had to find defendant acted "with actual
knowledge, or at least
_ _ _ _.c::.._::_ reckless disregard or deliberate
ignorance of the truth or falsity of its claims") (emphasis
added), reversed in part on other grounds, 626 F.3d 1257 (D.C.
Cir. 2010).
For example, Ponce testified that MWI employees knew that
the commissions MWI was paying to Indimi were much higher than
those being paid to agents in other countries. Test. of Juan
Ponce, Trial Tr. Nov. 13, 2013, A.M. Session at 15:25-16:7,
29:1-7, 33:10-15. James Hess testified that MWI "should have
been fully aware" that the purpose of the· Supplier's
Certificates was to ascertain whether nonregular commissions
that could be indicative of "noneconomic decisions by the
purchaser of the products" were being paid. Hess Dep. at 46:5-
17, Sept. 22, 2004. The jury could have concluded, based on this
testimony, that MWI acted with reckless disregard when it
certified that commissions constituting 26%-37% of the sales
prices were "regular." See United States ex rel. K & R Ltd.
P'ship v. Massachusetts Hous. Fin. Agency, 530 F.3d 980, 983
(D.C. Cir. 2008) (observing that reckless disregard under FCA is
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an "extreme version of ordinary negligence") (quotation and
citation omitted); United States v. Bourseau, No. 03-907, 2006
WL 2961105, at *13 (S.D. Cal. Sept. 29, 2006) ("[A] provider
that fails to inform itself of the reimbursement requirements
acts in reckless disregard of the truth of its claims."), aff'd,
531 F.3d 1159 (9th Cir. 2008).
In addition, MWI employees testified that Eller personally
approved every commission MWI paid, including Indimi's
commissions. Test. of Thomas Roegiers, Trial Tr. Nov. 19, 2013,
A.M. Session at 20:9-23; Test. of Juan Ponce, Trial Tr. Nov. 13,
2013, A.M Session at 9:22-10:8, 14:14-21. Eller testified that
he could not remember MWI ever paying any other agent a
commission of more than $5 million, far less than the largest
commission Indimi received, $12.75 million. Trial Tr. Nov. 8,
2013, A.M. Session at 120:11-22; Def.'s Ex. 500. Eller signe?
the majority of the Supplier's Certificates declaring that no
irregular commissions had been paid, even though he knew that
Indimi's commissions were significantly higher than MWI's
average commission rates. This evidence supports a finding of
reckless disregard. See United States v. Krizek, 111 F.3d 934,
942 (D.C. Cir. 1997) (upholding district court's determination
that failure to verify and review false submissions rose to
level of reckless disregard) .
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Moreover, this Court has already noted that there was
evidence that Eller had actual knowledge that the commissions
should have been disclosed. Judgment Opinion, 2014 WL 521524, at
*11. Ponce testified that MWI employees were informed that the
Ex-Im expected commissions to be no more than 5 percent. Test.
of Juan Ponce, Trial Tr. Nov. 13, 2013, A.M. Session at 21:20-
22:10. He testified that, "we knew that we were violating .
the rules. We just hoped that we would never get caught." Id. at
35:3-4. 12 Thus, the Government submitted sufficient evidence to
the jury for it to find that MWI's certifications were made with
actual knowledge of falsity. 13
12
MWI emphasizes that Ponce's testimony alludes to a need to
disclose all commissions, not just irregular commissions.
Renewed Mot. at 32 (citing Test. of Juan Ponce, Trial Tr. Nov.
13, 2013, A.M. Session at 63:15-64:3); Renewed Reply at 16.
However, in combination with Ponce's testimony that Eller,
Roegiers, Lang, and Bucknam knew and "had the same concern" and
that there were conversations about that concern, the testimony
still supports the jury's finding of scienter. Test. of Juan
Ponce, Trial Tr. Nov. 13, 2013, A.M. Session at 33:16-34:23.
13
MWI insists that the Court must credit Eller's testimony that
he had a discussion with Marvin Solomon ("Solomon") of the
Export-Import Bank ( "Ex-Im") regarding the Supplier's
Certificates in which Solomon told him that the Bank "do[es] not
get involved in commission levels." Renewed Mot. at 43 (citing
Test. of David Eller, Trial Tr. Nov. 8, 2013, A.M. Session at
120:22-122:1); Renewed Reply at 23. Mr. Eller's credibility was
highly contested at trial. Pls. ' Closing Arg. , Trial Tr. Nov.
21, 2013, A.M. Session 70:1-73:4 (arguing that Eller testimony
about Solomon was both internally inconsistent and directly
contracted by the testimony of others); see also Trial Tr. Nov.
8, 2013, A.M. Session at 63:19-21; 124:1-17 (Government
impeachment of Eller's testimony compared to deposition
-27-
All of MWI' s arguments ask the Court to "make credibility
determinations or weigh the evidence," which of course it is not
permitted to do. Reeves, 530 U.S. at 149; Estate of Mark
Parsons, 651 F.3d at 124. For example, MWI argues that its
evidence that it interpreted the term "regular commissions"
reasonably was so overwhelming that it "negate [d] an inference"
of reckless disregard. Renewed Mot. at 35-39. The Court included
an instruction specifically informing the jury that it could
consider such evidence as relevant to the issue of "knowledge."
Trial Tr. Nov. 21, 2013, A.M. Session at 37:3-12 (instructing
the jury that in determining whether MWI acted "knowingly," it
could "consider whether or not MWI had a reasonable and/or good
faith interpretation of the term 'regular commissions' on the
Supplier's Certificates"); see also Order on Motion in Limine 4
at 3 [Dkt. No. 397]. Thus, MWI was explicitly permitted to argue
that its certifications were based on its reasonable or good
faith understanding of the term "regular commissions." See Sci.
Applications, 653 F. Supp. 2d at 97 ("A defendant's reasonable
interpretation of an ambiguous regulation may well be a
successful defense to an alleged FCA violation in appropriate
cases.")
testimony); Trial Tr. Nov. 8, 2013, P.M. Session, 6:1-7:15
(same) .
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Thereafter, the jury weighed the evidence and found that
MWI' s evidence of good faith and reasonable interpretation was
not as credible or persuasive as the Government's evidence to
the contrary. As discussed above, the Government produced
evidence that MWI employees knew that the Ex-Im expected
commissions to be much lower than the commission being paid to
Indimi, 14 and knew that the commissions being paid to him were
significantly higher than those being paid to any other MWI
sales agents. Given that the Court must not make credibility
findings or weigh the evidence, Reeves, 530 U.S. at 149, it is
clear that MWI' s argument about the "reasonableness" of their
interpretation is without merit.
MWI's other arguments similarly reiterate the same
arguments it made to the jury in its closing argument. In doing
so, it misstates the role of this Court, which is only to decide
whether sufficient evidence was presented to the jury on each
element. The jury was presented with MWI's evidence and
arguments at trial, and was not persuaded by them. Given the
sufficiency of the Government's evidence to support the jury's
finding of scienter, MWI's insistence that the jury should have
14
This distinguishes this case from K & R Ltd., 530 F.3d 980,
wherein plaintiffs could not point to any evidence that might
have warned Defendant that its interpretation of a particular
term was incorrect. Id. at 983 (quoting Safeco Ins. Co. of Am.
v. Burr, 551 U.S. 47, 70 (2007)).
-29-
interpreted the evidence differently cannot support a reversal
of the verdict.
IV. CONCLUSION
After a careful review of the record, the Court concludes
that there was a "legally sufficient evidentiary basis for a
reasonable jury to find" for Plaintiffs. Reeves, 53 0 U.S. at
149. Consequently, Defendant has failed to establish that
"reasonable men and women could not have reached a verdict in
plaintiff's favor," Nelson, 953 F. Supp. 2d at 13 0, and its
Motion for Judgment as a Matter of Law [Dkt. No. 443] and its
Renewed Motion for Judgment as a Matter of Law [Dkt. No. 478]
shall be denied.
An Order shall accompany this Memorandum Opinion.
June 25, 2014
G'Llw~Z
Gladys Ke~sler
United States District Judge
Copies to: attorneys on record via ECF
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